American Riviera Bancorp, holding company of American Riviera Bank, has announced unaudited net income of $9.5 million ($1.84 per share) for the nine months ended Sept. 30, 2022 compared to the $9.1 million ($1.77 per share) earned in the same reporting period in the previous year.
Unaudited net income was $3.8 million ($0.73 per share) for the three months ended Sept. 30, 2022 compared to the $3.0 million ($0.58 per share) earned in the same reporting period in the previous year.
The increase in year to date unaudited net income in 2022 compared to 2021 is primarily attributable to loan growth, increased interest income on liquid assets, and continued stability of the deposit portfolio.
“We are pleased to report record earnings this quarter and year to date,” said Jeff DeVine, president/CEO. “Our balance sheet and relationship based deposits have remained stable despite the volatility created by Federal Reserve policy this year.
“Stable funding allows the Bank to deploy cash into higher-yielding assets including our loans to clients on the Central Coast of California which continue to grow and exhibit strong credit quality.”
Third Quarter Highlights
Return on average assets for the third quarter ended Sept. 30, 2022 was 1.08%, a significant increase from 0.75% in the previous quarter and 0.98% in the same quarter last year.
Total loans, excluding Paycheck Protection Program (PPP) loans, reached $886 million at Sept. 30, 2022, an increase of $31 million or 3.7% from the prior quarter end and $158 million or 21.7% from Sept. 30, 2021.
Non-interest bearing demand deposits reached $520 million at Sept. 30, 2022, an increase of $33 million or 6.7% from the prior quarter end and $84 million or 19.4% from Sept. 30, 2021. Non-interest bearing demand deposits now represent 41.1% of total deposits.
Net interest margin increased to 3.69% for the third quarter of 2022, compared to 3.26% for the prior quarter and 3.54% for the same quarter in the prior year.
Total cost of funding sources increased to 0.16% for the third quarter of 2022, compared to 0.12% in the prior quarter and 0.08% for the same quarter in the prior year. Total cost of deposits, including non-interest bearing demand deposits, has remained consistent at 0.08% for the third quarter of 2022, compared to 0.07% in the prior quarter and 0.08% for the same quarter in the prior year.
Provision for loan losses for the third quarter of 2022 was $0.1 million, a decrease of $0.8 million compared to the $0.9 million expensed in the previous quarter. Year-to-date provision in 2022 of $1.0 million exceeds the $0.3 million expensed in the same nine month period in the prior year. Increased provision in 2022 is attributed to strong organic loan growth and not credit quality concerns.
Allowance for loan losses was 1.18% of total loans at September 30, 2022, compared with 1.20% at June 30, 2022 and Sept. 30, 2021.
The bank maintained strong credit quality with no other real estate owned, no loans 90 days or more past due, and only $6.3 million or 0.72% of total loans on non-accrual status, which are well supported by collateral and reserves.
The increase in non-accrual loans during the quarter relates to one loan totaling $2.9 million which is adequately supported by collateral and strong guarantor support.
Tangible book value per share was $14.90 at Sept. 30, 2022, down slightly from the $15.17 at June 30, 2022 due to rising interest rates and rate volatility in the third quarter of 2022 as a result of Federal Reserve actions which, in turn, increased tax adjusted unrealized losses on the securities portfolio.
All bank capital ratios were above regulatory requirements for a well-capitalized institution with a total risk-based capital ratio of 12.73%, as compared to 12.94% in the previous quarter and 12.28% in the same quarter of 2021.